Welcome to Hoist Finance Capital Markets Day 2026. I am Björn Olsson. I am a research analyst at SEB covering Hoist, and I will be moderating today's event. For those of you participating online, each session will be ended with a Q&A session. To ask a question, you can type your question below the video player. Let me then start today by introducing CEO Harry Vranjes.
Thank you very much, Björn, and thank you everyone for joining us both here physically in the room and, of course, I heard that there's significantly more online. To all of you, a massive welcome as well. I am Harry Vranjes. I've been CEO of Hoist Finance now for about a little bit more than three and a half years. Originally, a computer science student, but stumbled into this industry in 2001 on an IT assignment, and I haven't left since. I've had various roles in IT, operations, country management in these 25 years in the industry, pretty much all over Europe. It is an incredibly interesting industry. There is so much happening here at all times. We had the global financial crisis and everything that happened in the south of Europe after that and so on, which has always created new activities in the industry.
We have a wide range of Hoist Finance experience here in the room from people who are new to the company and then, of course, from I think the oldest employee, or not oldest, one of our younger, but the most senior employee is Fabien Klecha with 15 years in the company, so he will know a little bit more details. We will try to balance this message. As you saw in the press release last evening, we have updated our external financial targets, and we also published our new volume ambition. We will take you through them in a few minutes, but let's start with an introduction and also let's see what we are going to be talking about today. We'll start with me here, an introduction to the company, talk a little bit about what we set out to do.
Some of you maybe were here for the 2024 Capital Markets Day, what has happened since then, and then we will go straight into the financial targets. Then Fabien will take us through our investment strategy, what the market looks like out there, and why we believe we are the ones who will win this game. After that, Magnus had so many topics, we couldn't really find a good headline for the section. But it is around how we manage the portfolio, how we manage our funding and capital, and how we manage our costs and how we extract the operational leverage in a little bit more detail than I will be talking about. Then we will have our country managers for the six ones in the executive management team going through their countries with some tough questions, and let's see how they answer.
Then we end up with a wrap-up. Again, welcome. Hoist Finance, we are a specialized debt restructuring. This is basically an asset manager of non-performing loans. We have been doing this for 30+ years now. We operate in 15 markets. We are about 1,200 employees now, used to be 1,000, and with the acquisition of Azzurro Associates that closed just at the last days of Q2, we became 1,200. The return on equity numbers, the profit numbers, et cetera, come from an exceptionally strong start of 2026. We have had a really good start of this year. Also on the deployment side, of course, with SEK 8.1 billion deployed, actually SEK 5.5 billion deployed organically and then SEK 2.6 billion including Azzurro Associates. We have received our second credit rating hike since the last Capital Markets Day. We are now Baa1 or BBB+ if you go by the Standard & Poor's terms.
What is it we do then? This slide was actually in the deck from 2024. It was way in the back. I think the title was Active Risk Management. Actually, that is the perfect title for this slide because that is what we actually do every day. We buy non-performing loans from leading banks around Europe . What we have in our book right now, in our total portfolio, has had an original loan value of about EUR 60 billion. We have paid EUR 6 billion for that. We have bought them at a 90% discount. Basically, 10 cents on the dollar is what we pay, or 10 cents on the euro most likely, is what we pay for these debts. With that, the credit risk per individual loan is basically taken care of.
This is bought in competitive auctions, typically, where the market value is set by the professionals in the market. To then reach our financial targets, the previous ones, as well as the new ones, we then need to, let us call it double that. We need to collect almost twice that amount. That will then amortize the portfolio, generate revenue, and we will reach our targets. We have been doing so for the last 30 years. We have been doing it through the Lehman Brothers crash, through COVID, through Silicon Valley Bank and Credit Suisse, through Trump, Independence Day, Liberation Day, or whatnot, unclear, et cetera, and even Iran. Collections are very, very stable. We have dug through our data lake many times to try to find correlations of macro events, et cetera, and what links to payment behavior of our borrowers.
There is very little direct correlation to anything. We can see a weak correlation to unemployment, which would make sense. Basically, we have some sort of an amateur psychology assessment on this that basically when times are tough or bad, people look after their own house, basically. That is the best we can come up with in addition to our regressional studies. Credit is an essential driver of economic growth, of course. People can invest in housing, they can renovate kitchens, it is popular in Stockholm, buy a car, borrow money for an education. Companies invest in research, in automation, heavy machinery, lots of investment in AI these days. It creates jobs and growth. Society as we know it would, of course, not function without access to credit. But as with every good thing, too much of it usually end up in tears.
We can see here the credit expansion basically in Europe towards households and small companies since the early 2000s. Expansion up until the financial crisis hit, then actually contraction. Then as we thought we were done with corrections, we had the Ukraine and the high cost of living crisis, et cetera. If you look at what NPLs have been generated during this time, already here before the recognized NPLs, we should say, because they were probably already being built up there, we had an NPL ratio of about 2% in the banking system. It then peaked up to some 8% during the crisis. Then it's slowly been working its way down. If we go to looking at what is out there today, I think the gray line, you will see that is the NPL ratio.
This is now quarter by quarter, so it starts 2019. You will see that we have the remains of the crisis years slowly working itself out, and we've come to a new level here where we're at about 2%, but 2% of a EUR 16 trillion stock. What we see here as well, we have about a EUR 400 billion-ish stock of NPLs. This range here, consumer and consumer mortgages is basically 90% of Hoist Finance's book, or used to be before Azzurro, now it's 83% of Hoist Finance portfolio. What we are looking at going forward as well, and what we have been developing in the last years is the light blue bar, the SMEs. With SMEs, we look at the smaller companies in that range. NPLs have been generated. What options do the banks have? Work it out in-house.
This is one of the core activities of a bank. They've been doing so for many, many years. As long as volumes are very small, that could work. Increasingly, they have outsourced to specialized servicers. I think when you do that, then you get the specialization. There are specific systems linked to the court systems, linked to bailiffs, et cetera. All of this, there's let's say predictive dialing. There's all of these types of operational capabilities that a normal bank does not have. If we look at these two options, while you're doing this, the NPL is still on your balance sheet. It's still on your balance sheet, contributing to your NPL ratio, and costing capital.
If you have a lot of NPLs that you need to do something about, then securitization has been a very, very popular solution, especially for the enormous volumes that came out during the peak of the crisis. Here you would set up a structure where you transfer the risk basically to a co-investor. Somebody takes 20% of this co-investment, you keep exposure to the 80%. The person taking the 20% is also the one taking the first loss. That person will usually request quite a high return on that tranche of the notes. This basically means that you will get rid of it from your balance sheet. You will get some exposure to your NPLs, the economics of the NPLs from before.
But it is quite complex, and there are a lot of risks associated with it, regulatory in different markets and so on, and there is a flowback risk. What happens to what remains in this securitization when the seven, eight years have expired? Or you can choose our favorite option, sell to a specialized NPL investor, and of course, preferably to a specialised debt restructurer like us. You will then reduce your NPL ratio. The portfolio will leave your balance sheet. You will release capital, and you will be able to focus on issuing new loans. And with new regulation, we see that banks are now selling more. So out of a fairly flat stock, sales are going up. So another way of saying it is basically despite increasing sales, the stock is staying flat-ish, meaning that it is being replenished faster. So there are NPLs coming in.
This here is now still on original loan value. But I think since the financial crisis, the European regulators have done a lot. NPLs have been in absolute core focus. There has been banking package after banking package with activities and regulation aimed to making sure that this crisis does not happen again. Now, one of the key regulations, and the one that we see the effects of now, is the so-called backstop regulation. Basically, to make sure that banks do not keep the NPLs on their balance sheet, value them at 90% or something like that, despite not a euro or cent has come in in amortization payments or interest payments. To make sure that that does not happen again, so you create this awful bubble, the regulator set up a calendar provisioning scheme saying if it is an unsecured loan, three years after default, it is written down to zero. To zero. Excuse me.
And if it is a loan with collateral, a secured loan, as we call them in this presentation, it is seven years. No exceptions. The banks have been opposing this regulation quite a lot in the beginning, and they wrote all sorts of memos and so on to introduce exceptions and so on. None of them have been approved. And this is valid for all loans that are issued after 2019, 26th of April 2019, to be exact. And that means basically that the impact of that regulation, of course, you will not see it in 2019. Somebody would have to take a loan, default immediately, and then sell it. So it has gradually been growing over the years. And I think this slide is my idea.
I need to apologize, but we try to illustrate how we are doing this, basically how we see this, not just in rumors or prices on the market, but actually in our own data. So we see that this cost, basically you need to hold 100% equity against your NPLs once they are written down, if you do not get them off your balance sheet. So if we look at what, since the last Capital Markets Day, so Hoist Finance would buy portfolios that were sold on average 55 months after default. So what happens until then? Well, the loan would default. The bank would work it out by themselves, maybe contact a servicing partner. Here is a three-year agreement. Collect as much as you can. We will eventually sell the tail.
That generated that blue level of expected collections going forward, and of course, that is what Hoist Finance would be pricing and paying for. This leaves not so much collections, still enough collections to invest the way we did in 2024. We still deployed SEK 10 billion that year. But per portfolio, less collections, less cost, or basically a lower investment. What we see now, same metrics. Now it is 38 months, and that is basically exactly two years later. We are buying portfolios all over Europe, as you well know, and we have been deploying serious amounts. This is not one data point. These are many cases. Now it is 38 months, meaning that what we buy is a lot bigger. This means larger investment, fresher portfolio.
Fresher in a way that means that fewer debtors have moved, fewer have changed phone numbers, so increases contactability, increases the possibility of amicable resolutions, which typically go faster than spending money on legal processes through bailiffs, et cetera. This basically means larger portfolios from the same original debt at the same return. Yes, we pay more because we get more, but our return hurdle is still the same. Basically that means if you look back at the previous slide of SEK 75 billion in original value, that growth between SEK 73 billion and SEK 75 billion, this effect is much bigger than that slow growth. We believe that this trend will continue. We do not have any numbers to prove it yet. We will get back to you for the next Capital Markets Day. But we believe this trend will continue, and it kind of makes sense.
It is expensive to hold these NPLs with the new regulation. Other dynamics there as well is that basically the banks have become more prudent in their provisioning. Fabien will go through the coverage levels at the moment, but basically the gap between seller and buyer has shrunk, which means that basically the bank will do less of a loss, and as we have seen in some cases, even a profit selling these NPLs. In the past, if they had it valued at 90 and somebody bids 5, yeah, it is a tough sell. Strategic update. We are the leading debt restructurer in Europe. Those with the sharp eyes who have seen this slide before will recall that it said banking regulated credit market company or something like that in the top. Now it is basically we are doing investment management.
This is where we price and analyze 250 portfolios a year, 50-man strong team. Fabien will speak warmly about it. I will also speak warmly about all the other people who are involved in sourcing SEK 10 billion of investments per year. It is probably some 400 people in the group to be able to bring in that kind of a level of portfolio. It is legal, it is compliance, it is risk, it is the local management team, the local operations, lots of people in 250 different projects during a year. It is an amazing machine. Once we have both the portfolios and they end up on our balance sheet, these guys will also monitor the performance and monitor their assumptions in feedback loops. We assume this. Did it happen six months later, nine months later, 12 months later? Yes or no, update the model. Capital and funding.
I guess this is the area where most people say, yes, you are banking regulated, you have access to the deposit savings accounts, and that is a huge competitive advantage. Yes, it is. We have some 125,000 savers around Europe, saving in euros, saving in SEK, saving in złoty, trying to match our asset side as well as we can on currency. As we mentioned before, the Moody's rating has come in basically two hikes since the last Capital Markets Day. Now, loan management, this is where the actual collections happen. Also here, we have a different strategy than most of our peers in the industry. We basically split it in two. There is strategic loan management, which means you set the collection strategies, you steer either your internal operations or your external servicing partner.
You follow up, you gather all the data you can from every successful action, every failed action, every part payment, full payment. All of that data goes back into our data lake to the investment team. We are the largest in Europe at the moment. We have the largest portfolio in Europe at the moment. You can only be one of the largest if you are large in the six large economies of Europe. So we have the U.K., we have France, we have Italy, we have Spain, we have Germany, we have Poland. Excuse me if I got them in the wrong order. I did. But in those markets where we see a steady flow of NPLs, we are super happy to have our own internal platforms.
If we, as we have done now lately, grow a market from a SEK 3 billion book value to a SEK 5 billion book value, it does not mean that we grow the operations to the same size or with the same ratio. We are very careful with growing our fixed cost base. So we outsource overflow. Then we have all the complementary markets, the markets that are outside of these six, and they are, of course, the majority. Nine of our markets are in that category, where maybe the portfolio flow is a little bit more irregular, where we do not want to have a fixed platform costing money regardless if we win or lose a portfolio. Because we become a worse investor, and you can become a forced investor, something you absolutely do not want to be.
There we work sometimes fully with outsourcing, and sometimes with multiple partners, benchmarking them against each other. I think in the industry so far, it has been a very much do it yourself industry. We build our own IT systems, we employ our own people. We are going to be 800 people in this market. Now go get the volume. In an investment business, we believe that is not the right structure. So what did we do? Those of you who have been with us for a while know that we had the rejuvenation years between late 2021 and 2023. Let us see here. During this period, the changes that I just described or this model that I just described was invented and set here. So we reviewed the full organization, right-sized the cost base in all areas. We reviewed the full portfolio to make sure that, are there any underperforming segments?
Are we married to them? Is there a market for this? If so, let's sell it. If somebody else thinks they can do better and are willing to pay higher than our book value, let's sell it, and again, right-size the organization. Some quite tough, unsentimental years, but I think it brought us into the phase we have been now in the last three years. The thinking here, because we used to say here that we have a volume ambition of SEK 36 billion by 2026. Sounds great, but it's not the only reason we said that. There are scale benefits, obviously, to a platform like this. Running a specialized debt restructure, running a regulated bank is expensive. It requires fixed cost. With a small portfolio, it's going to be difficult to reach the level of profitability that where we want to be.
We wanted to deliver at least 15% return on equity and a continuous 15% EPS growth. You need the scale. Now we have reached all those targets, and it's time for the next phase in Hoist Finance's development. That is to actually use this scale that we have now achieved. So we have the platform in place. We have become an SDR. We have regulatory stability, which we have not had before. Now it's very clear. Obviously on the scale, you will see operational leverage. We have always talked about operational leverage in keeping our indirect costs flat while we grow the book and grow the direct costs in line with the income. This has been successful throughout 2024, 2025, 2026. Of course, you would also want to see some operational leverage also on the direct costs.
Surely if you collect more with the same amount of people, et cetera, you should be able to get some leverage there. Yes, we are starting to see that, and Magnus will go through that in his CFO update later. Basically with this, the percentage difference is going to be smaller there. But the amount, of course, we're talking about, the absolute amount is of course much larger in the direct part than in the indirect. So this is something we will be working hard on to deliver going forward. We will leverage this sourcing capacity. When we right-sized the organization, we were quite tough on many things, but we doubled the investment team. We increased the funding team a lot to be able to source what it is we want to deploy. This is in place for every portfolio we become better and better.
Every portfolio that has lived for a while and fed back all that information, we become better and better. So this we will leverage also going forward. Then it's the risk side of things. Now with a larger portfolio, let's call it SEK 40 billion or SEK 39.2 billion, every new additional investment that we put on top of that, should something go wrong in that investment, it is a smaller impact on the total portfolio compared to if it would be at SEK 18 billion and by a portfolio that goes the wrong way. So the size here increases stability and resilience and also on the funding side. The liability side is much more stable. Then finally, the growth ambition, portfolio size growth ambition. This is an ambition. I want to be very clear with that. Just like the SEK 36 billion in the past period was an ambition.
We have grown in absolute term book value from end of 2021 after selling the U.K., which we actually sold it here. We were at SEK 18 billion up to SEK 39 billion, so SEK 21 billion. Coincidentally, it is exactly SEK 21 billion missing to get to SEK 60 billion by the end of 2030. This here represents a CAGR growth of 15%. The additional 50% growth, let's say, represents, let's say, 10%, if we count from half year. This is an ambition. If it ends up at SEK 57 billion or SEK 63 billion, is not the point here. This is the direction for us internally and that we communicate out to the market that this is the growth we believe is possible and that we will go after. We will, as always, do it at the right returns. Nobody in Hoist is measured on volume acquisitions, not even the sourcing teams.
It is return on equity across the board. If you start buying aggressive volume at low IRRs, you will fail that target. How will we get here? Fabien will take you through the details, but basically we have four pillars of growth. What is it? Grow what you know. Increase market share in current asset classes, in current markets. We believe we can expand our market share in the markets that we are in. Some of them are quite newly entered, where we expect to do more. Geographical expansion. There are still white spots in Europe. We will stay in Europe for the foreseeable future. Then, of course, the SME segment. This is 30%, the light blue part of the seventh slide, I think it was. 30% of the NPLs in Europe.
We are focusing on the granular part of that, which has roughly the same ticket size as our secured consumer mortgages, for instance. We are not looking for half-finished golf courses or things like this. Small, granular, in line with our current risk appetite. We will continue to work that. This is a market in a couple of our jurisdictions, France, Italy, to some extent Spain very big. U.K., of course, now with the acquisition of Azzurro Associates, who are specializing on only this. Then we see a lot of it on the balance sheets of the banks in more rest of Europe. We need to unlock that volume. Oh, sorry. There is one more. Selective M&A. When we look at companies, we look at companies for the assets, for the portfolio. That is what we want in our book. We will continue to view it that way.
We are a picky buyer. Many processes fail because basically we want to make sure that the portfolio that we are getting with the acquisition is valued in such a way that it will be accretive to Hoist from day one. We will continue to reason in that way. Like I said, that is a source of growth if we find it. With that, going into the financial targets. Without further ado, let's dive into them. I have gotten a few questions already this morning. Isn't this a bit too conservative? You are already at 27.5% ROE or something like that. For Q2, that is correct. You see here the red line is the reported figures, so basically what we put in our quarterly report. The blue line, which I think is the most relevant one, is the underlying core business delivery.
You will see that it has grown, especially after the rejuvenation years when we had adjusted the cost base, then it started taking off, and we also managed to grow the portfolio. We believe that 20% with a growth rate of 15% EPS per year is a very ambitious target. I think most companies would agree. We have set that as a new floor level, and I think we will see here going forward as the portfolio grows, as we continue our investment strategy, as we stay focused on the returns, we expect that to rise. But during the next strategic period, the floor is 20%. Earnings per share, again, should be viewed in combination with the return on equity target. Obviously great growth here, especially if you look at the underlying.
The SEK 3.95 you see here is the profit from selling the U.K. platform in 2022. Yes. If you would draw the line there, then it is even more impressive. We have delivered 16% per annum on average, including the one-off, and we want to continue that growth rate. We are still a growth company, and we will remain a growth company. Looking at the capital levels, we have a corridor today which says we should be 2.3%- 3.3% above regulatory CET1 limits or requirements. We are comfortably above that at the moment as we are 4.2% over. You could say, why do not you run the capital tighter and distribute more? I think we want to be able to deploy, we want to be able to be engaged in a number of larger transactions at the same time and be resistant to external shocks.
We have been fine through all these Trump things. Five years is a long time. Lots of things will happen in the world. We will keep this buffer. Then on the dividends and share buybacks, also quite common question. Obviously during these rejuvenation years, nothing was repatriated to the shareholders. We started in 2024, paid out in 2025 with a small dividend of SEK 2 per share, basically launching our dividend payout program. But we actually also did a SEK 200 million share buyback during that year. So, total repatriation, let us say 37%. Looking at 2025, the ones that got paid out now in May in 2026, we had a base ordinary dividend of 25% at the lower range of our previous range.
Then we had an extraordinary dividend on top of that as we released the backstop capital that we were holding until we became an SDR. So, we are now increasing this to 30%-40%, and our priorities are, as always, portfolio investments at attractive or accretive IRRs. That is number two, three, and three really. Then comes the dividend policy and of course, any excess capital after that will be redistributed to shareholders through either extra dividend or share buybacks. That is the new range and target. Summarizing these goals, we will continue to be a more profitable growth company than we are today. We will continue to invest at accretive returns. We are hiking our ROE floor by 5 percentage points, whilst at the same time keeping the earnings per share growth target and increasing the repatriation. With that is my intro.
Over to Björn for Q&A.
Thank you. The floor is now open for questions. Either you can raise your hand in the room or write in the chat. If we can get the microphone to Ermin, we can in the meantime take a question from online. What characterizes your investment strategy versus your competitors, and do you have a competitive edge in choosing the right portfolio at the right time? Let's start there.
Fabien, I do not want to steal your whole presentation, but maybe it is good for the people in the room. I think the main characteristic difference between what we do and our peers do is that we cover consumer and SME, so borrower types, right? Either you are a small company or you are a private individual. Most focus on the private individuals. We can handle loans with collateral, loans without collaterals, and it does not sound like a huge difference, but basically it is the one kind is statistical underwriting, right? You see the cash flows coming in from tens of thousands of borrowers over a 10, 15-year period, and you statistically model that with a reference curve and so on, right? That skill we have and we master, I would say.
But then to at the same time be able to do line by line, and that is basically what you do when it is mortgages and when it is SMEs, right? You take a pack of 100 pages, nowadays, we also use AI for this as a support, and go through line by line. What is this? Okay. There is a real estate as collateral there. There is a co-owner of the debt, there is a co-debtor, there is a guarantee here and so on. After that, basically we value the claim. We set our purchase price for this individual claim.
Those are two very different underwriting techniques and to have a team that can handle both of that and have local teams that can handle both of that, which I think both Makram and Andrea here from France and Italy will talk to you about later on is I think one of our absolute competitive edges.
All right. Now we'll move.
Yes. Ermin Keric from DNB Carnegie. Maybe the first question would be, you showed how the seasoning of loans you're buying is much fresher now than 2024. Is that anything to do that you try to avoid backstop loans as well at that point? Or is it just that banks are actually selling much fresher claims?
It is a general trend. We looked at that as well because of course, when we were not an SDR, we did try to find the older portfolios, but basically the trend is if we would go back 2022, 2023, 2024, 2025, 2026, the trend is clear, right? Maybe there's two or three months on the 55 months that you can shave off, but that's it.
Okay, fair enough. Just on that, you are now buying fresh claims. Does that entail you need any kind of different digital tools to be faster on collecting, anything like that that is changing the skill set you need?
I would say we have always been strong on the fresh claims in Hoist Finance. I think this development helps us. If you want to be really strong on the non-payers, basically the really old difficult ones where maybe you do not even find the borrower, then you need maybe a 700- person call center, et cetera. We do not have that, so we typically outsource those claims. What this development means is basically we can bring more on our own platforms.
A question on SME. You are highlighting SME as a potential growth market for you as well. At the same time, you say that you want to grow on what you know. Do you see an operational risk there entering and growing into a market that you do not have the same sort of experience in?
There is an operational, let us say, challenge, obviously, in starting something new. I think we have proven that now as we move into new markets, how we take. It is not a complete black box for us when we enter. We investigate the market. We make sure that we have the right people on the ground, but we also bring from our other markets and central teams, a team to help deploy. We did similar when we started with the secured underwriting back in 2019, 2018, sorry. There, we basically set up a multi-disciplinary team that had experience from this, who had worked in the mortgage departments of the banks, and could travel around and make sure that this was set up correctly. We use the same methodology now.
Basically, the skills we have in France, the skills we have in Italy, the skills we now have in the U.K., we put those together. Then we go analyze the next market, and we see how we can handle it.
Fair enough. One question I have gotten this morning on your new target is you are targeting a ROE above 20%. My colleagues expect you to achieve that quite significantly. A general pushback is then, with such high returns at such an attractive market situation, no market is static from a competitive point of view. Naturally, there must be increase in competition again. I guess, how do you view that potential that maybe the competition might be increasing for years to come on the investing side? I do not know, maybe while we are at it, could you give us a brief historic backdrop as well on how the dynamics has changed under your CEO tenure?
Absolutely. Thank you for the great question, by the way. No, I think we are all aware there has been a lot of change in the industry lately. The last, let us say four years. As interest rates started going up, or actually we should probably start earlier. 2018, 2019, there was a big push for M&A. Everyone wanted to be bigger. We had mergers between Lindorff and Intrum Justitia. We had Lowell becoming larger, et cetera. I think those situation built up a lot of goodwill on the balance sheets. Goodwill needs to be financed on the liability side, so bonds were issued. Then interest rates go up. Of course, we have benefited from that. As the industrial players scaled back, let us say 2023, 2024, 2025, the competition from the industrial players was less. There were still successful industrial players out there buying, competing with us, but there were fewer.
The investment funds saw the same opportunity. "Okay, here is a market that is under-serviced. Let us get in there and try to buy portfolios." Basically, I would say the competition was sort of flat, but the actors were replaced. What we see now is that many of the investment funds, they had higher return expectations or no local expertise potentially out in the markets. So they did not deploy as much as they had hoped. We see some of them now scaling back, whereas we do now see that the industrial players are getting into better shape, most of them. At least they are announcing that they will be increasing their purchases. But they still have a funding side that Magnus has a slide on. Now I am ruining that too. About basically twice our funding cost. One would hope that the return levels are adjusted to that.
Otherwise, we will end up in new trouble. I think that's on the, let's say, investment funds and the industrial players. Then we have, of course, people who look at Hoist Finance and see this SDR thing seems to be working out. Let's try to copy that. We know that there is already another SDR in Sweden, Myntro. They're already active, and I think they became SDR actually two weeks before us. We know that there are players trying to qualify to become an SDR maybe next year or 2028. How they will deploy, what they will deploy is a little bit difficult to say right now. From one point of view, we are happy that there are more SDRs coming. We need more SDRs around Europe to make sure that this becomes a really firm status. That's a positive from the regulatory side.
Then how they will act once they are live, let's see. When I talked about the model earlier, it is not just the funding cost. Many of the investment funds could source money at similar levels and still didn't make it, or still didn't manage to deploy the amounts they had hoped for. I think you need a little bit of everything in our recipe to copy it, not just the funding.
Fair enough. We have another question online. The EBA will review the SDR framework no later than end of 2028. Have you been in dialogue with EBA on this, and what's your view on the SDR structure relative to the regulators' expectations?
Yeah, that is a common misunderstanding. I think if you read the text, it says that EBA will review if the criteria for qualifying as an SDR are sufficiently risk-based to further a secondary market of NPLs in Europe, roughly. They are looking at the criteria, and of course, it is an expensive status to get. As you all remember from us in 2025, we had to hold all that extra funding without the benefits for a full year. Then you need to start building it up, let's say three months before that. So 15 months, we have a lot of cost for little benefit. I'm going to Brussels on Monday, actually, to discuss just this. But we are in constant dialogue with the regulators here in Sweden. We speak to Riksbank, Riksgälden, the SFSA to make sure that everyone is on the same page here.
All right. You've been teasing for the next speaker throughout your own presentation. Let's not wait anymore. The next speaker, Fabien Klecha.
Steal your seat.
Yeah. Sure. All right. Welcome, everyone. We're going to talk, as you have understood, investment strategy, and I think we've come a very long way. The past two years, we've increased our deployment, as you have seen, in two steps. I'm going to go through it. We had the ambition to have a book of SEK 36 billion by the end of the year. We are already at SEK 39.2 billion. We had the target to deliver 15% ROE. We are beating that target by a margin. This came with a very disciplined approach to our investment. What I'm going to go through now is how we choose our investments as a first section. I think there were a lot of questions on this, so that will be of interest, hopefully. Second part is the market development.
We will go through the stock of NPL, the primary market, the secondary market, but as well as the competition, how each of our competitors is structured compared to us and why, and the last part will be why we are well-positioned to take on this market. I want to stress something throughout the 30 minutes I'm going to be talking about investment. Our target is returns. It's profitability. It's not growth per se. Growth is the consequence. I think we've proven that we've been able to step up in this market, our level of deployment, given our geographic spread, et cetera. The growth that, at the current rate, we will grow anyways, but we think we will be able to grow further. Starting with how we invest, I think this is not something new, but I want to reiterate.
We have five pillars in how we invest. Number one is our geographical spread. We are covering 15 markets in Europe, the six biggest being the ones mentioned by Harry earlier. It is mainly the largest economies in the eurozone, where we have the biggest NPL stock as well. And those markets, they are making the three-quarter of our NPL book currently. On top of that, in the past couple of years, we have actually expanded into new markets where we could see better returns that are accretive to our margins, but also where we could find good partners to manage our book. That geographical spread, where actually we have a good geographical diversification, means that there is no one single change in regulation or macro that can move the needle on the whole book or the whole company. We are not concentrated into any of those markets.
Talking about the loan exposures, we focus on banking assets. Our DNA since the very beginning is that we are here to serve banks. So we are mirroring the bank's needs, and we are constructing solutions, whether it is structuring, whether it is operational solutions, to be able to accommodate those NPL loans that they are getting out of their system, really. So we are setting up an organizational structure to be able to accommodate those loans and manage them. And one trend we have been seeing actually, the past years, is that there is more and more of mixed portfolios where the SMEs and the individual segments are sold all together. So if you are not able to operationally handle that, you put yourself out of the market, at least for a part of it. So you need to have that ability and that capability to do.
Now, if you look at how historically this market has grown, and I will go to that afterward. There are a lot of specialists. The main big servicers, they are focused on consumer secured because this is what was typically outsourced, what the banks didn't want to manage. Now, the banks, they are also selling a little bit more complex scale. Still granular, because the average loan on our book is SEK 105,000, so less than EUR 10,000. But a little bit more complex to handle, meaning in terms of complexity, actually for us it is a benefit because it means you have more sources of collection. So you have to go after the real estate collateral, you have to go after the financial guarantees, you have to go after the personal guarantees, all in one claim. So that is different workout situations.
Talking about the proactive management, this has been a difference compared to the years before in Hoist Finance. That has been a big change for us. We are an investor, and we are holding the asset, of course. But when it is necessary, we divest. And we happen to do this in several instances where the market was not attractive to us, we just exited the market. And I think that is also an answer to a question that was asked. When we see that the market is not attractive, for example, for a very long time, the unsecured consumer market in Spain was not attractive to us. We just disposed the whole portfolio and refocused our deployment to the secured assets, which are yielding very well, performing extremely well actually right now.
We can make these kind of decisions and allocate the capital where it best fits our requirement, our return requirement, primarily. Finally, the sourcing. I think we said two years ago in the room, we are going to source from the primary market, but we are going to source from the secondary market as well. We did. 23% of what we deployed since the next day after the CMD in 2024 is from the secondary market. We deployed SEK 21 billion exactly since that day, and 23% of that has been acquired from funds or from industrial players that were in the course of refinancing or repositioning. I think a point I can add, given there was a question on now that you are an SDR, maybe that is the reason why you are buying fresher.
Well, actually, as Harry said, no, and a proof of that is our co-investment structures. We have put in place three co-investment structures for the exact reason of accommodating the backstop topic. We have been able to deploy SEK 5 billion with three different investment structures and two different counterparties. One is a fund and one is an industrial player in the market. We are very proactive in our sourcing as well, and we see, we think, a big chunk of the pipeline. This strategy, when applied to the market, you see first step up in 2022, 2023. That corresponds to when the industrial players had an increase in the yields of their bonds, and then the step-up was at SEK 7.1 billion. Then we had another step-up, starting 2024, 2025. That does not include the co-investment volume.
Because if we put the share of our co-investor, it would be rather SEK 12 billion for both those years, exactly the same, actually. SEK 11.8 billion and SEK 11.8 billion here. So far this year, it is SEK 8.1 billion for the first half year. Our deployment has stepped up, and it is a combination of those new markets. We are seeing more volume in general in the market, and I will come to that after. Basically, we are going from one of disposal strategy from the banks to a recurring sale. We are seeing more recurring smaller tickets, which is suiting our model very well and which does not suit other type of players who need to put an SPV in place, a refinancing together, et cetera. We have that model that fits that constant flow of business. As of now, 53% of our book has been deployed the past two years.
As you can see, it is performing well. Most importantly, a few characteristic about that flow of new acquisitions. Number one, we have acquired close to 80% from our top markets. We are mirroring what we see in the pipeline in general in Europe. We represent the flow that is coming to the market. Number two, we have 29% of forward flows. It is recurring business that we will see year on year on year. Number three, we have seen a change in the mix of our pipeline toward SME. This is why our SME share came from below 5% to 17%. Also explained by the acquisition of Azzurro. But we are seeing more SMEs on the pipeline. This is suiting us because it is typically a good performance for us and it is typically better margin as well. Because not all the competitors are looking after this.
This strategy has led to this book. As you can see, this book is very diversified. There is no one jurisdiction here that is making more than 15% of our total book. 15% in Italy, then the U.K., Poland, Spain, Germany are making between 14% and 15% each. Then it is France 10%. All together, it is a very big part of our book with those markets. That said, the additional markets, they are very important for us because they give us that flexibility to be able to deploy when it suits us and to switch asset class when we see that there is a competitive tension. As I said with the example of Spain, this is a practical example of what happened. I could tell you other examples of that. The share of secured has not changed. It was, I think 29%. It is 30%, so pretty stable.
The borrower type, I talked about it already, 17%. Now, this is a very big, large table. You might wonder, okay, so maybe they are mixing the average claim within the asset classes. Well, actually, consumer unsecured, it is SEK 83,000. SME unsecured SEK 285,000, so a little bit more, but still very granular. On the secured side, whether it is consumer secured or SME secured, this is the same ticket. It is EUR 100,000 or SEK 1 million on average. So that is what we mean by granular. Now if you look at instead of going through each asset class, I think from the simplest, where you have one counterparty, it is an individual debtor, you try to find an amicable agreement, or you have to go legal through a network of bailiff, which is the simplest part to SME secured.
SME secured, it is mostly secured by residential real estate. We are explicitly out of any commercial real estate or corporate loans. It is the S of SMEs that we are targeting. So the small ones, not the large exposures. On those assets, what is interesting is the multiple source of collection that we find. We have real estate collaterals, we have financial guarantees, we have personal guarantees, and we have proceeds from liquidation. The underwriting is slightly different. We have a mix of statistical pricing and line-by-line reviews that we need to perform. That requires senior loan asset managers who have a good understanding of execution law of real estate valuation, and who are sophisticated enough to negotiate with sophisticated counterparties, basically. We have those skills. That is helping in this. Now, this has led to this performance.
The left part of the graph, the performance is our ability to underwrite and our ability to operationally deliver our promises. This has nothing to do with the market. This is us. Did we do better or worse than we promised? Well, if you look at since 2021, this has been constantly above 100% of our management targets, and by a margin. So we are very confident in our ability to price and our ability to deliver operationally. I think you do not have a better proof than this, looking at those numbers. The second part, this is actually the margins. This is the net 10-year unlevered IRR. Sorry for the wording, but this is basically without any effect of leverage. So no cost of funding and no leverage. What does it mean? It means that the margins came up starting 2022.
You see this is slightly coming up. Why? Because a number of the players of the market, they have seen their rates hiking up, and it is very healthy then to see the margin increasing at the same pace. That means that if you are squeezed by your cost of funding, then the margins on the market increase. The only difference with us is that we are an SDR, and therefore we are financed with deposits. We did not see that hike, so our own margins increased. So our own margin increased, and our performance increased as well. So we had the benefit of both those impact in our book. Now, talking about the market opportunity. There have been many changes. I have been, as Harry said, 15 years at Hoist Finance, so I have seen a few cycles, the mergers, and all the things that happened with the regulation as well.
I think what we can say throughout those years, starting with the global financial crisis, is that the regulator, who has taken many steps to create a secondary market, has made it more difficult for the banks to keep their NPLs on their balance sheet every time. So it started with the supervision of the systematic banks to start with, and then with the EU NPL action plan to make sure they had the proper provisioning, and reform in solvency system. Then the one single piece of regulation that has really unlocked the market is the prudential backstop. This prudential backstop, this has triggered a more recurrent sale, and that has pushed the banks to have a faster provisioning and find other solution than keeping the claims on balance sheet. Finally, the NPL Directive that has licensed the manager of those NPLs.
So past 10 years, big changes, structural changes, I would say, into our market. When the U.S., in the space of two, three years after the global financial crisis, completely absorbed the NPL stock, it took more than 10 years in Europe to go from EUR 1.3 trillion to EUR 400 billion today. So it took a long time. You can see that here. Now we are starting 2019. The peak was in 2013. So the disposal happened up until 2022, and now we are flattish. Does it mean that the supply is reducing? Absolutely not. Actually, we have a deep stock of EUR 400 billion still, number one. Number two, the banks are better provisioned because they have the same coverage ratio, but they are selling earlier. So they are taking less of a loss when they sell. They still take a loss on average.
We see that this market here, this was a lot of funds buying portfolios from EUR 100 million- EUR 1 billion purchase price. This is gone. Now, the average ticket we buy a portfolio at is EUR 20 million. All right? So when you are a fund, you do not set up an SPV and take a financing from the bank for EUR 20 million portfolio. It does not make sense. You need a different model. This is our model. The market is going our direction because we have this machine that can price, that can onboard, and that can manage those portfolios, any kind. Now looking at maybe focus a little bit on the various markets. If you see that table, you see really two trends. Number one is the concentration. It used to be that the stock was in the south, what I call the south.
I'm French, and now it's going to the north. North means France and Germany. It's probably south of Sweden. It's going north, at least, directionally. You can see that as the German NPLs are going +12% almost, the French NPLs +7%, whilst Spain and Italy, they are still reducing. -9% for Spain, -12% for Italy. There's a clear change in direction, and that's why our flexibility, our footprint makes a lot of sense. We've been, just taking an example, we've been many years in France since 2001. 2001, and it's a country I know well, as you can imagine. It's been a very difficult market for many years. The supply was very low, but we have always been there, and this is really appreciated by the banks.
The fact that we have always been in those markets, in Germany, in France, we've been constantly present, buying the little they were selling. The past three years, we've been seeing that our pipeline tilted a lot toward those jurisdictions, France, Germany, et cetera. Asking this question, how do you think your book will look like? There's a big chance that those markets which currently represent a quarter of our book will take some size, or will increase in size, sorry. Talking about the various players. I said it throughout, you historically had the funds. Now, I would say the funds, they are more partners, or partners in the sense that we co-invest sometimes. They can be also clients of ours in the sense that we buy from them rather than competition. They are competition for the big portfolios.
It happens a lot of times, but we don't see them as much as we did before. They have a different DNA. They come and go, depending on when the market is attractive to them. One of the criteria for them is the size of the investment. That size, yes, average size is going down. Number two, we have the industrial players. The industrial players, they've had higher funding costs since 2022. Again, we've been partnering with some of them to acquire because they have platform. It was important and interesting to co-invest with us. We'll continue to look after those opportunities, and we also buy from them. We are a good buyer of those portfolios because we know how to price, and they are happy to have a fair price for their portfolios rather than dealing with a fund most of the time.
We can even leave the portfolio with them for them to continue collecting, which is moving from a capital-heavy to capital-light model for some of them are trying to do. Finally, we have our model, deposit-based, constant capital. A big benefit for our counterparties is that they know we can close. We're buying from balance sheet, so they have certainty of closing. Not only because they've seen us for the past 30 years, and they know that we can price and deliver on operationally, but also because we have the funding on the balance sheet. When we handle a non-binding offer already then, they know what they can expect for their binding and for the closing of the portfolio. This has a tremendous value for our counterparties. Now you'd wonder, what sets us apart in the industry?
Well, you have heard there are more as they are coming, so you would say, "Okay, so you are not that special." Actually, what makes us special is the combination of a number of things. It is not one thing. It is the deposit base that we have together with our geographical footprint, the data we have for the past 30 years. We have been deploying billions of euros in the market for the past 30 years. So we have data which are commensurate to that deployment, and our ability to manage different type of portfolios. Finally, and I would not underestimate that, both the regulator and the banks, they value a lot our regulatory status. The fact that we are regulated the same way they are gives them a lot of comfort in handling their customers because they are still customers, and there is a reputation topic there. So this is quite important, too.
The combination of that is very important. Now, in terms of the sourcing of growth, we still intend to have a granular portfolio. We still intend to have a diversified portfolio. That said, there will be a few areas where we think there will be more growth. The number one is the SME. Remember the S of the SME. This is SEK 1 million on average, what we are buying. This is one-third of the NPL stock right now. One-third. So this is a large growing pool for us, potentially. When we set our strategy, we look at our coverage in terms of markets, we look at our coverage in terms of asset class. One smart move I think that was made was to acquire Azzurro Associates.
Azzurro Associates is covering both the U.K. and the SME asset class, and this is really supportive of our strategy. The fact that we have been stepping up on the U.K. So the U.K. is a mature market, and we cover both relevant asset class consumer and SMEs. France and Germany, again, not only we see that the stock of NPLs is big, but also we see that the risk on the balance sheet in general is big, just looking at the Stage 2 loans, which is an early indicator. It does not tell us how much will go to NPL, it does not tell us when it is going to go to NPL. It just tells us that there is some risk there that should be taken care of at some point. Finally, new geographies. We do not cover the full Europe. We do not intend to do so.
There are a few selected geographies where we think if we can get the right setup, that would be both accretive to our book and helping our growth. So again, the target is profitability. The target is not the size of the book, it is the ambition. We think we can get there, and this is basically a 10% growth since now. So we think it is something that is at least credible. I talked about the how, I talked about the what. I guess now it is about the why we are well-positioned. Well, this could be interesting for you to see. I do not think we have ever shown that before. This is our sourcing. So 80% of the market we think we are seeing, 80% of the volume in Europe, we think we are covering for. That represents around SEK 70 billion of deals.
We have the list of 116 different originators, so counterparties that we are dealing with. This SEK 70 billion that we are looking at every year, it is 250 investment case, 250 different portfolios that our team, our investment team, our local teams together, actually, our legal teams, are working on. The investment team is 50 people, but if you add to that the local teams, if you add to that the legal team, this is 200 people looking at 250 investment cases. Hard to replicate in the space of a couple of years. If you ask, "Why is different about Hoist Finance?" Well, good luck starting this from scratch. Out of those 250, you could say, "Well, you have grown a lot, so maybe you are buying everything you see." Well, we are bringing it to IC 120 investment case out of those 250. We are actually pretty selective, right?
That is both based on how competitive we feel we are, or our view about the market, or our view about the asset class, the origination. It is a mix of factor. There are different reasons. Bid-ask spread too high. Do not waste our time. Let us focus on what we think we can win. We deployed this then around SEK 10 billion last year. Median portfolio size is EUR 20 million, I said it before. It is a lot of work to be deploying close to EUR 1 billion. Then it requires onboarding. After you have done all the work on the investment case, then you need to onboard it, you need to prepare your team, et cetera, to deliver on the target that you have seen before, the performance target. Where did that volume come from? It comes from Tier 1 banks, primarily 52%.
Around half of the volume is coming from Tier 1 banks. Then it is Tier 2 banks. Regionally important banks, it is another 22%. Then a relevant part is also the secondary market. Then we have also some local banks. That was sourcing. Now, what do we do concretely? Well, when we receive an email saying, "Would you be interested in that portfolio?" What do we do? Obviously, we start with the NDA, et cetera. We look at the data, and for each jurisdiction and each asset class, there are different underwriting models. There are locally adapted models. There is no one model that fits all the jurisdiction. Not at all. We have tens of different type of models. Our team, the team of 50 of the investment team, they are not based out of London or Stockholm. They are actually spread in 10 different jurisdictions.
They are sitting next to our local teams. So they understand very well the operational aspects as well as the quantitative aspects, and they link the two. That is what makes the value of the underwriting team, that they are able to transform operational input, historical data into relevant underwriting assumptions for our portfolios. All right. Now, what is consistent though, across our investment is the way we look at returns, and that is the right-hand side here. What do we look at? We look at a few aspects, but there is one in particular that is important. So I will go through them. When you look at a portfolio, you have a cash flow curve, right? These cash flow curves compares to your investment. So if you buy a portfolio at 100 and you expect 101, you have a multiple of 1.01. We typically do not buy that. Do not worry.
If you have a super high IRR because the cash is coming very early, the slightest mistake in your forecast, and you lose your money. We look at the net money multiple because this is a relevant item, of course. That gives you an idea of how commensurate is your margin compared to your risk. How much of a drop in collection you can absorb before you make a loss? Number one. Number two, the unlevered IRR. We look at it for various reason. First of all, obviously, it takes into account the time's value of money, but more importantly, it gives us a sense of how we compare with competition as well, because everyone's looking at this metric. We look at it over 10 years. We know that there are different way of doing in the industry further away.
We look at it over 10 years. Then the weighted average life, which is, let's say, a way to apprehend the risk of the timing of our cash flows. But one metric is actually making all those investment comparable with one another, and it is the return on equity, and this is how we steer the whole company anyways. For every single portfolio we look at, we look at the return on equity, to be able to see where it's best to allocate our capital. Now, talking about our governance. This work that I talked about, we do it centrally. It's owned centrally by the investment team, but it is done jointly with the input of the local team.
It's very important we have a very strong, tight collaborations with our local team, to capture all the aspects of the deal and to have also some intelligence on the deal in the sense that we know what happens in the market at every point in time. Then we have a number of committees. Every deal is governed by this, so there's no one deal that is not approved by the committees. Whether it's the Management Investment Committee, the Board Investment Committee of the full board, depending on the size of the deal, this is going to a committee. There are some checks as well at the deal level. Every deal, there's an independent quality review for the deal, as well as a nice feedback loop. What does it mean?
It means that six months, nine months, 12 months after we acquire a portfolio, we review all of our underwriting assumptions and we check. How did we do on this? How did we do on that? Then we learn, and we constantly learn. This is what makes our model work so well. Obviously, the risk functions are involved in every deal as well. The risk gives also their view. On top of that, we have the internal and external audits. Finally, maybe worth reiterating, SEK 60 billion achievable. That's an ambition. That's not a target. We think there's room to deliver this, but what you should take away from this presentation is that it's still going to be accretive portfolios with the same underwriting discipline, highly granular, geographically diversified.
There will be probably higher share of SMEs in that mix, and we will continue to actively manage our book. That is, where we see there's no market and we don't have the scale, we will dispose. We will do some disposal. We actually did dispose SEK 1 billion the past two years, since the last Capital Markets Day, every time we sold at a premium. So conservatively managed as well. Maybe time for questions now.
Definitely. While we wait for the audience to find your energy, I have a few for you. If we start with the SME segment, it's a bit alluding to my question to Harry as well. It's a bit of a new market for you still. When you're bidding and investing, how is the market different from the consumer market? Are the competitive dynamics different? Are there different types of competitors, and how are you preparing for this sort of new market as well?
Well, it's a sweet spot for us, really. Because as I said, we have the DNA of mirroring what the banks are needing on the NPL side. Yes, we see slightly less competition. You need to have the know-how to onboard, price, manage those portfolios. Every jurisdiction I look at now, Italy, France, we have some in Spain or the U.K., it's usually better margins, better performance as well. So we really like that asset class, because that's not an easy thing to step in that. No, I don't want to oversell it. I don't want everyone to start looking at this. But it requires some special skill set to be able to do that. We've started maybe longer than what you think, because 5% of our total book was SMEs before. But in Italy, for example, we have a very long experience with SMEs.
It's been more than 10 years since we buy SMEs. In France, it's a little bit new to the whole market because France was very quiet for a very long time. All of a sudden, we see very big portfolios coming up. So you have a lot of, I would say, commonalities with the secured workout that we've been building. It's actually the same team managing both. We started in 2018, the secured. So it's been a while now.
The second market you highlight as a growth market is Germany and France. One thing I noted was that the coverage ratio in Germany is much lower than in the other market, and you previously said that the higher coverage ratio means that banks are more willing to sell portfolios.
Yeah.
Is this a factor that limits the near-term growth potential of portfolios in Germany, or how is this market playing out?
No. What I said is that the coverage ratios are stable, and we see the banks selling earlier. That means that given your coverage ratio is the same and you have fresher portfolios, you are selling earlier. Now, the coverage ratio in itself doesn't mean much, because it depends what kind of security you have against your loans. Typically, in Germany, they have a lot of commercial real estate. So they have big buildings behind those loans, and that could very well be justified that they have a much lower coverage ratio. The point was more to say, everything being equal in terms of coverage, they are selling earlier, and this is complemented by the fact that we speak to the banks. So we know.
They are telling us, "Yeah, okay, I'm making a loss, but this is okay." A few years back, they would have withdrawn the portfolio, as simple as that. We see that, I would say the best indicator is more of on-the-ground experience than just a very high-level ratio that makes a lot of different things.
Given your first-mover advantage in France and Germany, how big of a market share do you currently have in those markets?
Not sure if I can comment on the market share, but no.
If you rank yourself, are you top five, top three?
I would say in all of our key jurisdiction, we are always top three or better. So we are at least top three.
Okay.
Okay.
We will discuss it during the coffee break. A question from the audience.
Yes. Phillip Mølmen from SB1. Just while some industrial players see their balance sheets shaping up and new SDRs are expected to come in, do you see risks that your IRRs on employment can come down to the earlier levels compared to 2022 or 2023?
If the market keeps on being rational, which is our expectation, and we have seen the market has been rational, right? We had this slide here that is, I think, reflecting pretty well the timing when the rates increased. Right? We see them flat now. We do not see them increasing. Right? It might increase. If the rates increase, hopefully, the market will reflect that. Right? We definitely do not see them decreasing. Okay? There is obviously pressure in certain markets. In certain markets, yes, definitely, there is more pressure, but then we just reallocate our capital elsewhere. This is what we do. We try to adjust the whole time. We will not participate into that game, that is of increasing price to increase volume. We need to keep our book healthy, and this is our primary target.
Can we get the microphone here?
Thank you. What is the bottleneck, both on the investment side and the operational side when you are growing so much and taking on new volumes?
Yeah. Good question. We are seeing most of the volume, right? I think the bottleneck is localized in some areas, right? This changes in the sense that there are some parts of the market where we decide not to participate at a certain point in time, and that's taking off opportunities for us. That's a little bit our decision in a sense. Then we had some part of Europe that we did not cover. We're trying to remediate that as well. It was a bottleneck for us that was removing a growth potential for us. In reality, I think we have a very good setup now when you look at our ability to deploy the capital, our ability to underwrite, our ability to manage, with a very good mix between in-house and outsourced. So it's really difficult to see what will limit us.
I think what will limit us is localized in some areas at a certain point in time. We see that kind of behavior that someone wants to get into a market and therefore is pushing, knocking on the door. We then try to step away, wait, and come back.
Can I also ask your win ratio? Has that changed anything over the recent years when you're bidding?
Can I talk about the win ratios?
Yes.
In broad terms, yes.
It is around 40% on the ones that we bring to IC, right? On the ones that we bring to IC. We have a pretty good sense of what we can win before we even start, and how to win it. Meaning that it is a combination. Of course, the price matters, and that is the single most important aspect, but there are other aspects as well. Sometimes it is the SPA. I have seen a few competitors being kicked out of process because the SPA was not aligned with what the sellers need. One thing I did not mention, which I think is worth knowing, the Tier 1, 52% of our sourcing, we have eight-plus years relationship with each one of those banks. We know them very well. We know the person who is selling, we know their organization, we know their data, we know how to onboard their portfolios.
This is giving us a big head start and advantage when we want to build a long-term relationship.
Can I also just ask, you did not talk so much about the securitizations. There was a big part of offloading all the NPLs. Do you see that being a big upside if you see, I know GACS, HAPS transactions, et cetera?
Yeah, we are seeing such transactions, and that's a source of our deployment, in particular in Greece. We bought from those vehicles, and there will be more opportunities going forward. Obviously, the EUR 1.3 trillion to the EUR 400 billion, they have not all been collected on. They are on the secondary market now, right? We see regular sales happening, and this is part of the secondary market we've been talking about. There are disposals happening from those big securitizations in Italy and Greece in particular.
A question from online. How much do you need to invest annually to reach your SEK 60 billion target by 2030, given amortizations, et cetera? I think me and my colleagues can give the answer as well, but I'll let you do it.
Well, first of all, it's a target in 2030, so there will be difference by quarter, by year. On average, it's SEK 14 billion. But yes, it's around SEK 14 billion, the answer.
Great. Time flies.
All right.
So now we take an 18-minute coffee break. We restart at 3:00 sharp.
Thank you.
Welcome back. The next speaker is Magnus Söderlund, CFO.
Thank you, Björn. Is the sound working? Yeah. As Harry concluded, I did not get a very snappy headline, but hopefully this will be interesting anyways. My name is Magnus Söderlund. I have been the CFO for the company since 2025, last year. Before that, 20 years of experience all over Europe in the NPL and the debt collection industry, basically. That is me. The plan today is to cover the management of our NPL portfolio. So how we deal with the risks attached to it and how we manage it to maintain a healthy return level. I will also talk a bit about the other risks associated with our business and how we deal with those. Then we will look at the funding side of our business.
I think it is no surprise to anyone that we have a very competitive funding cost, but we will look at that in a bit more detail. The last piece will focus a bit on our operational leverage. Basically, what we have achieved so far and what we believe moving ahead. You will probably hear the word diversification a lot during my presentation, simply because we have an ambition to be just that. We want to be diversified. We want to be diversified both in our NPL investment portfolio, but also in our funding structure. To pick up where Fabien left off, this is a high-level overview of our centralized governance structure around our NPL portfolio. We conduct quarterly reviews for all individual portfolios from the time of acquisition until the cash curve has expired.
Basically, throughout the full lifetime of the book or the portfolio. We apply a 15-year collection curve, just to be clear. We focus on the outliers, both the positives and the negatives, to decide on what revaluations needs to be actioned at all times, and this we do every quarter. We are data-driven in everything we do, and for every negative outlier, we assess whether something can be improved operationally or if a revaluation is necessary and appropriate. We always take a prudent approach. If we see a need for a write-down, we will do it immediately and deal with the negative P&L impact that comes with that immediately as well. When we revalue positively, we take a more conservative stance. We only assume our performance for the period of time where we are absolutely certain that this will happen.
This assessment is based on the actual performance up until that moment and then by what we believe with our more conservative glasses on. What we do not want to do is to overestimate the future collection and thereby pushing more risk into the future performance. This is key for us. This is all a very centralized process. The decisions are taken by our Management Revaluation committee, which is run by me. For every individual portfolio where the adjustment is above EUR 2 million, we also need an approval from the board as well. Obviously, our external auditors also review and approve our decisions. Then we also apply something we call de-risking for the secured part of the portfolio, but I will come back to this in a bit. By this process, we are basically maintaining an active risk management of the portfolio.
And by addressing the problems immediately, we build a performance for tomorrow. We, of course, want to have a positive performance which is stable and predictable. Then we feed back the findings to the investment side of the business and the operational side of the business. For every portfolio we buy, the more data we get, and the more we learn for the next acquisition. If we look at our performance over the last years, this is the proof that our centralized portfolio monitoring works. We are at around 105% over time. This means that we are collecting 5% more than what the management collection curve predicts. That curve is not to be confused with the original cash curve that is established at the time of the acquisition.
The management curve is a living forecast, so to speak, and reflects all of the revaluations that has happened in the past for any given portfolio. So it's a current best estimate and the driver of the portfolio book value at any given time. Looking at the graph, you could say it feels a bit boring. Nothing really happens. But in this case, boring is extremely positive and exactly what we want. We want a steady and consistent performance. As you can see, we call this net performance. The graph shows the combined performance of the total book, both the secured part as well as the unsecured part. This brings me back to the secured collection performance. I will just briefly highlight the difference of the unsecured and secured collection forecast. For unsecured, we normally have a portfolio of many, many similar individual loans.
We know based on our data and statistical models that a portion of these loans will be paid at a certain point in time, and this becomes the forecasted cash curve. Then we get over and under performance based on the deviations that materialize over time, and this we book to the P&L on a regular basis. So it's a very statistical approach. For secure, it works a bit differently. A secured portfolio is forecasted on a line-by-line basis, as we call it. As an example, let's say we have a portfolio with 100 houses in them, just to keep it simple. We then make an assessment of when each house will be sold and paid, and based on that, we get our collection curve for that portfolio.
Then let's assume we have a house we expect to be sold in September of next year, one year from now. But when closing September now, we realized that it went much faster. We sold it already now. That means we have a positive deviation from the cash curve, and we could potentially book this as our performance for the month. But of course, we don't do that because that would create a problem in September of next year, and we can't sell the same house twice. What we instead do is we de-risk the curve of the secured asset. We book the collection, but we also conduct a negative revaluation of the book value to reflect that the expected cash in September next year is no longer there. That's what we call de-risking the curve. We remove the risk in the future.
On occasion, we may receive more cash than the curve predicted, and then we may up with a small piece of outperformance. In most cases, we would use that excess cash to de-risk the future curve even more. That is why we refer to this as net collection. The performance outcome we see in this graph includes the de-risked cases as well, or the secured side as well. I think the key message here, if we collect something prematurely, we are not going to add that to the collection of outperformance. In the example I just mentioned on the house, that would do nothing for this curve. This is just pure outperformance and nothing else. That is sort of the key takeaway from this. Then to illustrate the risk profile of our portfolio, we have this comparison against an average of our competitors.
It is based on data from five of the biggest industry players. It is based on 2025 figures because those are the latest we have available to make a relevant comparison. This is the cash curve projected from the current valuation of the NPL portfolio. This is sort of what and when we expect to collect. The blue line is us, and the orange is the peer average, basically. To come back to what I said previously, we do not want to push risk into the future. With the positive revaluation that I just talked about, we are prudent when assessing future outperformance. We do not assume that an outperforming portfolio will continue to outperform for 10 years because that would be to push risk into the future.
We expect a bigger portion of the cash flow to come in the beginning of the curve, which is clear in the graph. Our sort of proof in the pudding moment comes much faster. We are very conservative in adding value to the tail. We are more conservative than the average of our competitors, which is clearly shown in this graph. Then when comparing to other players, you need to remember that there are other factors in play here as well. It could be a different mix of assets, difference in geographies, et cetera. But the conclusion is still that we have less risk in the tail of the portfolio compared to our biggest peers. The key message again is that we are prudent in the way that we manage the book, and we are prudent and disciplined in how we price new acquisitions.
I think that also becomes very clear when looking at the performance and profile of this collection curve. Then moving on to the overall risk assessment or risk overview of the company. We are a banking regulated institution, which means three lines of defense. It means operational risk controls, risk assessments. We need to have ready-made plans in case something happens. It is all very diligent and very detailed. Overall, our assessment is that we have a low to stable risk profile, and we are very active in managing it. We just covered the credit risk related to the NPL portfolio, and we feel we are very much in control in that area. We also have a liquidity portfolio consisting of high-quality liquid [assets], government bonds, regional government bonds. So very low risk in this. Operational risk.
We have a continued improvement process built into monthly reviews and other benchmarks we do on a mark-to-market level. We focus on continuous improvement, and I feel our numbers and performance shows this to a very large extent. For cyber risk, we obviously have the same risk as any other company on the planet, basically. We have a dedicated team for dealing with this. Like any other bank, we have regular trainings and controls in place as well. On the market risks, we are a pan-European company with many investments in other currencies made out of Sweden in SEK. This carries FX risk and a built-in currency mismatch. We manage this by natural hedging to a certain extent. We have deposits in SEK, euro, and Polish złoty.
We also have our liquidity portfolio that we can use to steer the exposures. For the part we cannot fix ourselves, we hedge with the FX derivatives, basically. On the interest risk side, we have a maturity mismatch. We have a longer asset side and a shorter liability side. We try to naturally drive this mismatch down by increasing the length of the funding. For the part we cannot mitigate, we also hedge this as well with interest rate swaps. The liquidity risk we assess as very low. We have a material liquidity portfolio with the papers that we can sell off very easily. We have the regulatory risk.
Since the last Capital Markets Day, we have now notified and become an SDR, and we feel stable in this role, especially since we are aligned with the intent of the regulators. Our role is deemed necessary from the regulators' perspective, and we are now filling it. From that perspective, we feel we are in a good place. We obviously have a fairly complex organization. We have different subsidiaries, et cetera, so there is a portion of structural risk built in. But I feel like we are managing this very carefully as well. We have an overall assessment that our risk profile is low to medium. All of these areas are something we constantly monitor and work with on an ongoing basis. One second. Let's move into the funding part.
We will start by looking at the very high-level breakdown of our balance sheet and the big blocks it consists of. We are a capital-heavy NPL specialised debt restructurer, basically. In order to be successful at that, you need an efficient balance sheet, and one that is fit for purpose. We believe we have this. If we start by looking on the asset side, we have a highly diversified and granular NPL portfolio. We buy portfolios from the biggest bank in 15 European markets, and we have no single risk exposures. This means we are extremely diversified with low risk. We have the liquidity portfolio that has grown from the last Capital Markets Day. This is obviously a consequence of the SDR requirements, where we are obliged to hold a lot more capital.
It consists of high-quality liquid [assets], which are easy to dispose at any given time. On the liability side, we have our deposit base. This is basically 125,000 individual customers from seven different markets, all guaranteed by the Swedish Deposit Guarantee Scheme. So we are diversified also here. Then we have our bonds. They have also been diversified over time because we have done a lot of smaller but frequent issuances, and we have improved the maturity profile very much compared to three to four years ago. So in total, we have a very strong and diversified balance sheet, which really is fit for the purpose. This all leads up to this sustainable, low-cost, and diversified funding platform. The deposits makes up 80% of our total funding base, and this is obviously a very good thing.
We want to keep this level high because it is very cost-efficient. This is the driver of our low funding costs and the competitive edge it creates. Then we have the wholesale market funding side representing the remaining 20%. So we want to keep this mix to maintain our investment grade and also to have a greater extent of flexibility in our funding base. So if we take a look at our deposit platforms a bit more in detail. We are, as I said, currently present in seven markets, and we offer attractive savings accounts in SEK, euro, and złoty in tenors ranging from three months to five years. At the end of last year, we launched our own platform in Germany to complement the third-party platform we already had. In this year, we opened up our own platform in Spain.
We have decided to go to very deep markets with our own platforms. Everything is covered by the Swedish Deposit Guarantee Scheme, as I mentioned. No one can deposit more than the guaranteed limit of EUR 100,000. So not only is it the source of low funding cost, it is also a very attractive customer offering. So people will sign up for this, which we can clearly see in the graph because this has now been ongoing for quite some time. If we look at the market like Germany, the saving through deposits is one of the most common saving forms for the general public. The benefit for us is it is always on. It provides great flexibility for us, and we are able to steer the flows very effectively. As I said, we have approximately 125,000 customers with a total deposit of SEK 49 billion.
This average roughly SEK 400,000 per customer, EUR 40,000 per customer. So this is also quite diversified. Then in 2024, we moved away from the overnight or flex deposits in order to become an SDR. We had to do that. So we have effectively and over time replaced those with longer tenors, which is good because this obviously adds stability and stickiness in the deposit base. It also helps to mitigate the maturity mismatch I mentioned before. So it does sort of two things for us. Here is the comparison I think you referred to in the intro, Harry. To sort of further illustrate our competitive advantage, looking at our average cost of funding in comparison with some of our peers. This for us, the 3.5% that we see includes the AT1s we have.
It is a mix of our deposit interest rates combined with the cost of the wholesale funding and then AT1s. This leads up to 3.5% for us. We have a funding cost that is less than half of the average peer rate. We do have a leading funding cost in the industry, and this is obviously one of our most important competitive upsides. If we look at the development in our wholesale funding cost, we see a material improvement as well. We illustrate this with an example here. If we compare a senior preferred three-year tenor in 2023 compared to now, we are at significantly lower levels. That is roughly 350 basis points.
This improvement is obviously also driven by other factors outside of our control, but we are happy with the achievements we have made to get us to where we are today, being frequent in the market and with three upgrades from Moody's over the past two years. We also feel a lot of support in the market and by being frequent, we have improved our maturity profile significantly. If we look a bit closer into our NSFR or Net Stable Funding Ratio. Now being an SDR, we have to remain above 130% ratio. As you can see, we have stayed above that level with some margin. We deliberately want to leave a prudent buffer here. As this obviously comes with a cost, we are actively working on the NSFR efficiency of our deposit pool.
In the middle graph, we see the development over the last couple of years, post and pre SDR. What we are focused on is to optimize the NSFR efficiency in the deposits we take in. For everything that is sourced through our own platform, this remains 100% efficient for the entire lifetime of the deposit. For everything sourced through a third party, this has a different schedule. For the last 12 months of any term-based deposit, the NSFR efficiency or the available stable funding ratio goes to 50%. A third-party platform deposit is less efficient over the last 12 months of the total tenor. We are now obviously working to increase the share of our own platforms, but also to take in longer term deposits in our third-party platforms and shorter ones in our own platforms. Moving into the graph to the far right.
The way we measure our efficiency is by the size of the liquidity portfolio in comparison to the NPL portfolio. As you can see, we are improving in 2026. Our directed efforts are starting to pay off. You might wonder what is the optimal percentage in that metric. I wouldn't want to speculate too much around a target or a perfect number here. As we get a bigger share of deposits onto our own platform, this will help us improve this even more. This is a gradual process. We have initiated it for sure, and we can see the impact now in 2026, but it is a gradual process and it will take some time. That takes us to the last piece, the operational leverage. This is a slide I like very much.
This is basically illustrating our cost- to- income ratio from 2021 up until now. As you can see, we come from a darker place at least, with a 93% ratio to a 62% that we see now. This improvement is driven partially by better returns from our acquisitions as Fabien showed, but the majority of the improvement is coming from strong cost control in all areas, basically. The biggest driver of the improvement is coming from the indirect cost, coming from 45% to 20% over the period. We have managed to keep them flat at the same time as we have grown the portfolio size significantly. We have basically more than doubled the book. To achieve this, we have restructured both central areas and improved the efficiencies in the markets whilst adding cost in value adding areas of our business.
We have basically replaced cost and added more people into the investment side of the business and to the treasury side, and basically we have swapped cost where we see a better outcome. But we have also seen leverage coming from the direct cost side as well in terms of scale benefits, and we expect this to continue with the growing book and obviously continued tight cost control. This is key for us. But we have come from a 47% rate to 42% over the period. This is obviously a development we are very happy with, and as I said, we expect it to continue because this shows that what we are doing works. The question becomes how much more can you achieve? I want to refrain from guiding with any specific numbers.
What I can say is we expect the leverage to increase with the growing book. This is our absolute conviction and ambition. To close off, a quick look at our two previous periods. During the rejuvenation years, as Harry concluded, we saw fairly flat growth of the NPL portfolio, but a rapid growth of ROE, and this was obviously driven by our cost cleanup. Then we moved into the profitable growth phase with a bigger portfolio growth, but we still managed to sustain and improve the growth in profitability as well. This clearly shows that several years of much effort and successful work has paid off over time, and now we are well-suited and prepared to go into the next phase of the company. That was it, almost on time.
I guess being on time is we would expect nothing else from a CFO. If we do not have any questions from the room, we have one from the viewers online, and it is a very straight question. How will headcount develop from now to 2030?
2030.
Yeah.
Yeah. We have an ambition. We are very convinced that we have a very clear ambition to keep the indirect costs flat. So far we have been able to do this. I think I am convinced we will continue to do this, but at some stage, they probably will improve with the growing book. Now we have a really forward-leaning ambition, I would say. Regarding the direct costs and more the operational side, as I said, I expect, and we will make sure that the leverage continue to grow. I would not expect to see the same rate of inflation in number of FTEs compared to collection and book size.
Just to follow up then. At what level of book will you need to increase direct costs? What is the capacity?
As late as possible. I will see, but I think where we are today, this is working fine. We have a great output from the whole box, and I expect us to remain at sort of flattish levels well into the future. But with the SEK 60 billion book, it is slightly different from where we are today. I do not really want to speculate, but it is going to be slightly bigger.
Yeah.
Yeah.
Thank you. So maybe on the direct cost, to get leverage there, how much AI do you assume to drive that?
I want to say nothing, because people discuss our line of business. I have been in the industry for a very long time. I think certain companies that have a different set of cases than we do, there I definitely see a potential upside. I think there probably is one for us as well in the future, but the claims we have are more complex than your average servicer, I would say. To get to your question, Ermin, the leverage will come regardless of AI or not. That is clear. We are not betting on any AI initiatives to get there. This we will deliver without AI.
Can I also ask now when rates are starting to come up again, it seems like, how do you see the impact on underwriting returns, et cetera? More tied into rate duration, I suppose, with you having the deposit funding.
We are not seeing that much of an impact yet. It obviously protects us a bit now when we are moving into longer tenures. We are closing the gap of the maturity mismatch. I think if the rates continue to go up, we will eventually be hurt or impacted, and it is going to happen faster for us than for a bond- financed player, of course. But I think in the end, the way of funding ourselves the way we do is always going to be cheaper than going to the bond market. With the hiked rate, we also expect the prices to change. It is not going to happen as fast probably, but it should happen.
One last question, if I may. Do you expect to have only internal deposits in, I do not know, five years from now, 10 years from now?
All of it.
Is there any reason you wouldn't have everything internally?
Not really, no. As I said, we are in the process of moving over as much as possible. Then we go through different phases during the stage of a year. We could have periods in time where we don't need more deposits, then it's difficult to steer it. But with the investment pace we've kept over the few years, we're going to be in constant need, so that's going to make it quicker. But to get everything over, it's probably not going to happen in two, three years, I wouldn't expect. Now in Germany, we see a lot of traction. That's probably coming from the fact that we have been active in Germany through the third party platform, so the customers know us.
What we see now in Spain, I think I can say this, is that it's going to be a slower process because we have never been in the Spanish market.
But to follow up on the raising or the external deposit platform question, then a tail risk is still the Swedish Deposit Guarantee Scheme, because like you say, you raise deposit from a German individual and Swedish taxpayers guarantee it through the Swedish Deposit Guarantee Scheme. It is not discussed at the moment, although the risk has been slightly raised by the head of the [Swedish National Debt Office]. If this Swedish Deposit Guarantee Scheme would be reduced for foreign deposits, do you have a plan for what you would do in such an event? Because naturally it would stress your funding structure.
It would. To be honest, I do not want to speculate on that, Björn. We stick to what we know at the moment, and we would obviously have to find another way. But I think we have a track record of proving that we can act very fast when we have to. Like when we qualified for the SDR, there were a lot of rapid changes we had to take. We did it, we succeeded, and we came out an SDR in 2026. It is a complex question. Yeah.
All right. If we do not have any more questions, we will move on to the Managing Directors of the six largest regions, countries. You can stand here and then distribute the mic with solidarity, and then I will stand. Yeah, so.
Can you hear me?
Yes.
Yes. All right. Hi, nice to meet you, everyone, and fun to see the people behind the scenes. My name is Enok Hanssen. Sorry, can I stand here? I am the Head of the Growth Markets. I got a U.K. flag here, so I am not the MD of the U.K., but it is a part of the growth region or the growth markets region, which is what I am responsible for. In the U.K., we have a U.K. Managing Director who is the former CEO of Azzurro, who has now taken that role. My markets and what I do is basically what you could see on the slides of Harry and Fabien as others, and Sweden and U.K. It is a little bit the smaller pieces of the puzzle. Basically, I have two jobs. One of them is to open up new markets.
When we started with Sweden in 2023, we did Portugal in 2024, we did Finland in 2025, and this year we did Hungary. That is one part of my job. The other one is the markets which we think are subscale. We see that it requires a little bit more effort to come to scale, and we need to basically make a little bit of an extra push, like we have done now in the U.K. As you probably know, most of you, as it was mentioned, we acquired Azzurro Associates in end of June this year, we closed. I think that is a really interesting example of basically starting with a quite small footprint and not a lot of activity since we divested the platform in 2022.
Basically, what we had in the beginning of the year was eight people working with the outsourced collection of the unsecured consumer book, which we still have in the U.K. I think the U.K. is a fantastic market. It is extremely mature, extremely sophisticated. It is really one of the leaders in Europe in terms of innovation, in terms of how things work. What is interesting about it is that it is very sort of dominated by these Tier 1 banks. The big banking groups, the big universal banks, carry a lot of the flow. They, of course, are extremely concerned and interested in what happens with their claims when they sell them. That means there is a lot of requirements on us as an NPL buyer to have a full structure.
We need to be licensed. We need to have consumer duty. We need to have a lot of structural things in place. Up until this year, we did not have that. We only had this small part of the business working mainly through a partner. Now, when we bought the Azzurro Associates platform, we get both this SME specialist, as discussed many times, why it is important and why we think this is good. But we also really got a step- up in terms of getting the licenses, getting the people, getting the structure to be really able to go after those kind of clients, which carry a huge part of the deal flow we see in the U.K.
I think the story starting with this sort of semi- small team and then gradually going bigger as we understand more about the market and see pockets of value is also really one of these things which sort of signifies or captures the essence of how we are thinking about going into new markets and doing these kind of things. Basically start with a very low amount of fixed cost to not create the must-buy syndrome, what was used to be called feeding the machine in the previous Capital Markets Day, but rather being able to get the relationships to understand how the market works and not be basically forced buyers when something comes to market.
Now we can see that as we have learned more about the U.K. market again, we were able to identify this opportunity to get the step into the SME space while enhancing our capability to transact with the big Tier 1 banks. Basically leading to a situation where the previous team of eight people have now been absorbed into the Azzurro team. The Azzurro CEO has become the MD, and basically, we have, I don't want to say that integration is a non-event, but I think it has reduced significantly a lot of the sort of integration risk because basically, it's been a sort of bolt- on. The end state in the U.K. now, I don't think will be the end state of all the growth markets and all the new markets. I think this is really dependent on how the market structure looks.
I think it's important for us that having a low fixed cost level is strategic because that allows us the opportunity to not invest if we don't want to, but it also gives us the opportunity to really go after something when we want it. That idea of having basically the market structure, dictate or set the operational model is a way where we can be flexible and go into different markets depending on the market structure, whether that is a big market like the U.K., where it's very sort of lot of volume, professional sellers, supermarket, or if it's a smaller market where things are maybe more lumpy. One year maybe we don't want to buy or we don't want to invest, but another year it is much more coming.
Having this connection and the proportional setup between the operating model and the market structure makes us really flexible in being able to capture opportunities even if they don't fit a sort of one-size-fits-all kind of model. When we're looking at these different markets, we have done now four in four years. I think it's not a requirement to do one every year. It really depends. It took us probably more than a year to do Portugal, so when we started with Portugal. The reason was, I think we really want to understand how the market works, and we want to have a combination of things in place. We want to have the right people. We are typically hiring industry experts, people who have been around for 20 years. They know all the tricks of the trade.
They really understand it in a way we cannot understand it in Sweden or in London. Combined with having this confirmation around the deal flow that it is not a market which is captive or something special, but it is truly competitive and open for us. Finally, having a good fit from a kind of regulatory compliance point of view. I think there are some markets which are more complex to enter. Other markets are more similar to what we are used to, and there is a strong, let us say, bias towards continuing in the markets which operate like we are used to. I think the results speak for themselves. Portugal has had a fantastic development since we finally managed to close it. I think in the presentation you saw from Fabien, he was mentioning these 250 IC deals or IC transactions.
I think we did 10 or 15 of those in Portugal before we actually managed to win. The reason is, of course, that when we really go after it and we do it, then we want to be confident that the results will come like they have been doing. I think that is the sort of takeaway from this whole thing, or at least my thing, regarding the new markets and the M&As. So we will continue to do it, but we will only do it when it makes sense from an ROE perspective and when we can be confident that going into Portugal or Hungary or whatever market will really work for the long term. Because in the end, like Harry said, that is the main measurement and how we are being measured in doing these things.
It is not about putting another flag or saying that we are now live in another country, but it is really about being sure that by adding this market, we will add more ROE accretiveness than we basically introduce in terms of risk and complexity.
Interesting. Just a follow-up question on M&A then. It has not always been a recipe for success. Why will this time be different with Azzurro?
I think, yeah, I think that's a fair question, right? I think there's a couple of reasons. The main one is that when we look at the M&A, and we looked at this transaction, we look at it as a portfolio deal. This is same as the deals Fabien's team does every day. The transaction or the M&A price is really based on the portfolio which is a part of the deal, and that's what kind of the price we pay. But then in terms of the kind of value we receive, we get the value of the portfolio, we get the structure, we get the licenses, and we get the people. We see that there is a sort of price which is supported by the portfolio valuation.
But actually why it was a great deal is because we also got all these other values, which is a little bit more hard to maybe count. But this is not a synergy case. There is no expectation that there will be cost synergies or revenue synergies or something like this. The deal stands on its own as a portfolio investment.
Interesting. Thank you.
Thank you.
Shall we move to France maybe? Just following the map.
Thank you. Hi everyone, and good afternoon. My name is Makram Chebli. I have been the Managing Director for Hoist in France for the last three years now, and I have been with Hoist for the last 13 years, mainly covering business development for France. I have a few minutes now to take you to France, so let's travel. What I would like to do is first to tell you more about the market, and second, to talk about Hoist in this market. I will start with the French paradox. As we have been saying over time, France sits on the biggest stock of NPL in Europe. The other funny fact that we have seen earlier is that this stock is increasing now, together with Germany, it is a stock that is increasing.
The reason is that the French bank historically has really managed their NPL by selling portfolio abroad and what they had in their entities abroad. This is changing. They are selling much more in what they hold in France, and this is due to profitability concerns, but also due to regulatory pressure. We are seeing that increasingly. What is also changing is what they are selling. We have talked about claims being sold earlier in the process, and this is totally true. I will go back in times. We have been on the market for 25 years. Fabien mentioned that. The banks have been selling really written-off claims, very old, multiple times reactivated. There was not much to take out of that. This has changed, and what we are seeing is claims that are much fresher, and also new asset classes.
We are talking about over-indebtedness cases, and increasingly, significantly increasingly, SME portfolio, mixed portfolio consisting mainly in SME. This is not a forecast. This is what we see in the deal flow. Over the last three years, since more or less the last Capital Market Day, we have seen bigger transaction and many more transaction that we historically have seen on average. We feel that the market has started to move since then. Now going to where Hoist is in this market, and there are three elements that differentiates us from the rest. The first one I will start with is our historical presence. 25 years we have been there, even when not much was sold. But we stayed there. We stayed there, we worked on building strong relationship with sellers, building confidence, sourcing transaction for the future, we could say.
The other thing that is also very difficult to buy is that we have gathered data across all asset classes. This is the first point. The second point is that we cover the full spectrum of the asset classes. We invest, as you can see on this slide, we invest in unsecured, of course, secured, and SME, and private individual in the secured area. So we really cover everything, not the commercial real estate, but when it comes to the main concern of banks, we are there. So this also differentiates us because when we talk about our competitors, they often focus on a slice of that. So we are really a one-stop shop for these banks that are selling now. The third element I wanted to talk about is the fact that we are a regulated credit institution.
As I mentioned, banks are selling much fresher claims. They almost are selling customer relationship and not closed accounts. So they really are careful to whom they are selling. This status, the fact that we are supervised, really gives them a quality stamp, and it gives us a quality stamps vis-à-vis them. So this also differentiates us. Bottom line, the market has started to move. We have been there for a long time now, and we are totally in place to continue capturing the growth that we see in this market.
Given that the market is sort of wakening up on the backdrop of the backstop regulation and so forth, how much more can the market grow until it reaches a new steady state?
The market has started growing, but we don't see any limit to that in the near future. The stage two and stage three is increasing significantly. Fabien has shown that earlier. There is real pressure on bank to sell. It's real pressure, it's not just talk. There's two things driving it. I mentioned profitability. Capital sitting in stage two and stage three is not earning anything when banks are already under pressure and need to really improve returns relatively to their European peers. Second, the regulation. The NPL Directive is now part of the French law. So it's setting a frame where it makes it easier for French bank to sell, and also for us to be more confident in the way we are pricing. So this is expected to make it easier for the market to turn and bring more volume to the market.
What we see on the ground bears that. We are seeing sales happening abroad now. It is happening at home. We are seeing a pipeline that is the strongest that we have. It is a very significant pipeline. If there is something I would like to stress, it is the pipeline on the SME. The SME is really the area and the asset class where we see most of this happening. Banks are under pressure to sell, and we are there to help them.
Interesting. It almost feels like a football match here, but let us move on to Italy, to Andrea.
Yes. Good afternoon. Yes, I am Andrea Giovanelli. I am the Managing Director for Italy. Italy is quite an historical business for Hoist and we have been active in the country since 2011. We gathered considerable experience on the market, and on the number of asset classes. For the last years, for a certain time, we have been the largest book invested in one single country in the group. We still are, and such a book now is SEK 6 billion, and it increased in the last few years at a steady pace, slower than other countries. We think it is a significant growth because we attained that in a market that Fabien showed well, which has decreased, and which compared to the years when the stocking of NPL was present in the banks in Italy. It is reduced by 3x , 4x .
It is a completely different market, but still we have grown our book, which mathematically means that we have substantially increased our market share. How did we manage to do? Well, basically, a little bit like Makram was evoking for France, we widened our footprint in terms of asset classes. Now we have quite a wide range. We do secured, unsecured, and secured from a lot of time. SMEs, but individuals. We are also important investors of [payers], what we call [payers], which are claims already restructured by somebody else, but which still needs a certain maintenance. We have a wide range, which help us in increasing the volumes. Even more importantly, which somehow provides us with the flexibility to allocate our capital at any given time in an optimal way on Italian market. Which is important and it is difficult to replicate.
I maybe insist once again on this, my colleagues already did, but it is true for Italy as well. Italy is quite a mature country. We intermediated huge volumes on NPLs in the past years, so we learned a lot. It is mature, it is sophisticated, it is specialized. To be competitive, to be profitable in this market, you must be an expert of each asset class you are purchasing. To purchase more than one or two means that you must be expert competent in all of them. It is difficult to replicate. It requires time, it requires refining the process, and making mistakes and losing money. It takes time, and it is an expensive exercise. Doable, but we think to have a strength there. The primary market is evolving, as always done so, and it is now evolving under a number of metrics.
Of course, it is on the press, Italian banking system is now living a consolidation wave, and there are merger and acquisitions, and there is a lot of movement. We think that this will help us in the future in the sense that we will get less banks. Italian market is still pretty much fragmented on the primaries side. We get less banks, which means less deals, but a little bit bigger. We are a big investor, so somehow it goes in our direction. The regulatory pressure is increasing from European Central Bank, but particularly from Bank of Italy on less significant banks getting prepared to trying to get prepared the system to external shocks. Of course, these somehow increase the addressable market for us.
Well, I will not insist on that, but yes, claims that come on the market are fresher and fresher, the freshest possible, basically a few weeks after the default, which means that we buy richer credits. There is more cash there, and requires more refined capacity to extract such value. Everything that is difficult comes together with higher margin, of course. It goes a little bit in the direction of what we like, difficult things. Finally, on the competitor side, there is a little bit of reduction of the pressure because Italy was one of the few markets where some banks were investing in the NPLs, but they are banks, so they cannot be SDR. Of course, the business is not sustainable because of the backstop provisioning. They are basically reducing their investment, and some of them are even stepping out of the market.
The other investors have been not sufficiently successful and some are slowing down or stopping their activity. A lot of things that changes. We think that we are well-positioned for the facts that we have pointed out. We think we are in a good position to accompany the banks in their needs, and we will try to continue to do so in the future.
All right. I was thinking then if we assume then that there will be fewer bigger banks and fewer larger deals out in the market, won't that result that the large funds are coming back to bid in Italy?
No, because in relative terms, it is not a massive change. To give you an example, the stocking phase which in Italy was from 2010, 2013, 2014, the average deal probably was surely above EUR 100 million. But the largest transaction had been EUR 1 billion. We are not talking of that now. The average deal in Italy is below the group average, EUR 20 million, Fabien. In Italy, we have EUR 10 million, EUR 15 million as an average deal. So if out of the first 20 banks in a few years, we will have only 15 that EUR 10 million, EUR 15 million will increase by EUR 15 million, EUR 20 million.
All right.
Not material.
You sound optimistic. Moving to Germany then.
Thank you. Good afternoon. My name is Mihails Mihailovs. I am responsible for Germany. Germany is one of the oldest markets we have at Hoist Finance. I think if I am not mistaken, we have been established in 1997, so next year is going to be 30-year anniversary for our German unit. German NPL environment is quite stable. We have been experienced steady inflow of the NPLs, and as you saw from Fabien's presentation, we are still thinking that we will see more. It is a very well-established legal system, well-functioning recovery processes, supporting the predictability in the debt recovery overall. Competitive landscape is quite fragmented. We have quite a few local players and also international players. We also see new financial investors coming into Germany in the last couple of years. The Hoist Finance main focus has been and remains to be unsecured consumer NPLs.
We have been quite successful in that asset class, and it is actually prevailing asset class in Germany. However, over the last few years, we have seen an increase in the SME NPL stock, especially on the bank balance sheets. We see slight signs or small signs that this market is opening up as well. There are portfolios coming into the market composed only about the SMEs. We are there to address that market. We are currently also busy with building up that competence internally, and we are also working with the partners to do that. Operationally, we have our own platform, that is around 200 FTEs we have in Germany, and we used to do the workout ourselves. However, with the pace of the investment, as you have seen from Fabien's presentation, especially in Germany, we need to catch up also the operational capacity with that pace.
Therefore, in the last couple of years, we started to gradually outsource the workout to our partners, the capital- light servicers. We are now trying to establish a panel where we mainly focused on servicing the claims that are labor-intensive, where we do not feel we have the right competence to address.
That is quite interesting, actually. How does the servicing market in Germany look like, though? Given that it is also a quite young market from that point of view.
It is quite unique from the p an-European perspective for the reason that in the rest countries of Europe, we have seen the consolidation of the servicing market, so there were M&As happening. It was not that much in Germany. There were a couple of big M&As and that resulted in having couple of countrywide players. But in general, it remains highly competitive regional market. You have quite a large number of local players or players which are specialized on certain asset classes, just doing certain competency for their business.
Interesting. Thank you. Moving to Poland.
Thank you.
You do not miss the Greece, are you sure?
No, it is—
The Greece is the last one. Okay. Good afternoon. My name is Mateusz Poznański. I have a pleasure to run the Hoist business in Poland. Previously, I was 20 years at the banking sector, so you may say that I was selling the loans, which I now try to manage from the debt industry perspective. Hoist has been present in Poland since 2011. So 15 years road, starting from the small JV with the local partner, and to become as a second biggest company in our industry in Poland. Coming back to country, it is true to say that the Polish economy is booming. Everyone knows this. When you look on the GDP growth, the last years is the fastest growing economy. It is more important that in parallel, the household wealth is growing as well.
Currently, we are sixth biggest economy in EU and waiting for the invitation in G20 club. This is the situation. Couldn't be surprised that many players really like to join this road, this boat. Almost everyone is in the Polish market. Despite this super competitive market, our view of the market is positive. It is in simple words, let us say two thing. On one hand, you have unemployment rate on the lowest level in the history. This help us in the collection. On other hand, you have this GDP growth, which drives the loan volume increase. We still believe that this is the room to increase. It is simply to answer for the question why. Because when we compare the [indebtedness] of the household in relation to Europe, Poland is one of the lowest.
It is still room to increase, especially when you compare with the developed markets, it is even not half. Coming back to the, let us say, emerging market, when you think about the emerging market, and then you think it is unstable, unpredictable, but it is not the case for Poland. Currently, we can say that Poland is a mature market, quite predictable and stable. We have 40, 50 deals every year. Because of that, we can easily manage the risk, and we can also buy and focus on those deals which are profitable in line with our, let us say, strategy and the goal. That is why probably Poland is one of the most profitable market for Hoist Finance, and not only because of the macro is helping us. Of course, it is true.
It is not only because we have the great investment team who can price well the portfolio with cooperation with the great experience in the local team. But mainly because we are, let us say, organized differently. Our setup is 100% in-house operation, so we can focus on the process, being super curious about the excellent process, and then having the cost under control. Giving you only one example to illustrate this. The last five years, the collection was doubling in Poland, and at the same moment, it was the question, we keep FTE level on the same level. This is the situation of Poland, and maybe I should say something in the end, is one more thing. It is one more thing when you think about the Polish market. We are operating on the main part of the market, so unsecured individuals.
But 1/4 of the market is the secured and SME. This is what we see as a potential growth. We already invested in the secured [EUR 20 million], and we are now building the team for the SME. This is the next engine to, let us say, continue the growth or to maintain the excellent growth as we have seen in the last years.
Then it sounds like with low unemployment, NPL levels will probably remain flattish then for banks. On the unsecured side, I guess you will grow with GDP-ish. The structural growth engine will be SME, it sounds like.
It probably is the combination. As I said, this 1/4 of the market, this is the place where we see the potential growth and also the core part of the market. When GDP is growing, then the volume of the loan is growing, and of course, if you have the healthy market, then the share of the NPL is going down. But there's a certain level when they should stabilize. I believe that the NPL level will be more or less on the same level, and then you can see the growth coming from the growth of the GDP and the volume.
Interesting. Thank you.
Thank you.
Last but not least, Greece.
Good afternoon. Good afternoon, everyone. My name is Sarah Salmona, and I am Managing Director for Greece. We have been in Greece since 2016, and we have been investing mainly in unsecured portfolios. We have outsourced all our portfolios since we bought them. We therefore do not have an internal collection platform. We currently work with two of the largest servicers in the market, and we have a team of approximately 15 people on the ground. The way we follow and steer our servicing partners is what is making this work well, and it starts with the information we get. We get almost more than 40 reports from our servicers agreed in the contracts on a daily, weekly, or monthly frequency.
The majority of these reports relate to performance, where between them we have a very complete view of what is happening and what is the performance, and then a set of other reports that have to do with legal, regulatory, and finance issues. The point, of course, is not the number of reports we get, but the level of detail we manage to have, where we almost have the same information as a servicer does. We form our own view on how things are working and performance. Being able to see the portfolios in that detail is what allow us to be able to challenge our servicing partners. We have an experienced team on the ground that knows very well the market and the regulatory framework under which we operate. We are not there to receive updates.
We are there to work alongside the servicing partners and challenge them to do things different where we see that there is room to do better. There is a structural governance around it. We hold set meetings with everyone involved, including top management from both sides. We very frequently visit their premises, review performance, adjust strategy, resolve issues. Meeting that often is a big part of why this is working really well, because we are not waiting for quarterly reviews to take decisions or resolve and issues not pile up. Whenever it is needed, we are there to support the communication and cooperation between the sellers and the servicers, and we can do that because we have a long-standing relationship with the sellers that continue well after closing.
This is the way we have been managing our portfolios since the beginning, and it let us actively steer our portfolios despite the fact that we do not collect on them ourselves.
Interesting. On the growth side, coming back to Fabien's slide earlier, where Greece, the NPL market is in decline, in which of the sub-sectors do you see the largest growth potential?
The Greek market has emerged from the Greek crisis and from regulatory pressure on the banks to dispose their NPL stock. Schemes like HAPS, the Hercules Asset Protection Scheme, have also supported the market, and we have seen large transactions coming to the market from all asset classes. Volumes currently are lower, and this is what the normalizing market looks like. The majority of the bulk of the NPAs on the balance sheets of the banks have been disposed. We see now mainly the flow coming from the secondary market, where the landscape is more complex and more competitive. We see transactions coming from all asset classes. They depend on the plans that the ones that hold the securitizations have, and some have a short-term view, others have a longer view in the market. Looking forward, we also see credit growth across the banking sector.
We expect that to continue. As the loan books expand, we expect to see a more recurring new NPL stock and that the Greek banks will become more proactive and frequent sellers. It is also worth mentioning that the lower volumes and increased servicing costs are likely to drive consolidation in the market. Our fully outsourced model is very well suited to those dynamics, as we can scale together with the market.
Makes sense. Thank you all. We now round up with a final round of Q&A for today's CMD with the previous speakers, Harry Vranjes, Magnus Söderlund, and Fabien as well. Welcome up. You can stand over there. Ahead. You guys can stand over there.
We will stand over here.
Yeah. Then I'll change positions. Do we have any questions from the audience? Yes. Do we have a microphone as well?
This one?
Testing. Hi, my name is Michael Hedman. I am from a company called Bid Finance. My question is, does your minimum threshold for investments, will it change, or will it always be a red thread through all the different countries as you are now in 15 markets? Also, geopolitically, each country quite drastically can change financially in each country in very short terms as well. Will that be changing in the future? We work a lot with buyers, but we see some buyers minimum investment size is EUR 20 million in one country, can be EUR 5 million in another country. We see these changes all the time. How do you guys see for yourself in the future?
Well, maybe this is a question actually for. We do not really have a limit, right? We have limits. But we buy portfolios from, let us say, EUR 500,000 investment, up to EUR 250 million, right? That can be in any market, right? Obviously, if we are going to deploy EUR 250 million, then we need to have some serious track record. It would not be a first bet in a new market, right? That is how we see that, right? When it comes to, you alluded to geopolitical changes, et cetera, in markets. But we are tilted to the western side of Europe. We have just now opened up Hungary. But in general, very large share, except then for Mateusz. But we count Poland into the Western Europe now as well. He will be happy to hear.
I think there, with that, the corruption risk and in general, geopolitical stability is higher.
A question from the online audience, and it is probably good to ask this now when the country heads are not on stage. What is the variance in terms of profitability, top to bottom, for the different markets last year, and what are the key factors explaining the variance?
I am absolutely sure Mateusz, again, would like to —is it you who have asked the question, perhaps, on your phone? No, I think we don't necessarily disclose that. But I think we obviously do keep a ranking, and we have a standardized target for all markets, basically, right? How we steer the company is on the return on equity target. We have said to the outside world that we were going to deliver 15% up until today. And of course, that 15% needs to pay for head office, for investment team, for IT, for a lot, right? So the targets on the individual markets is, of course, higher than the 15%. And for them, they also have, of course, indirect cost in their own local market, which means that every portfolio they buy needs to deliver a higher return on equity than their country target, right?
To pay for their local cost, right? So the return on equity goes through the whole organization all the way down, right? Or if you see it like [inaudible ], which all the way towards the customers, right? I think that's what I can say there. And we do have the country target. There is sort of a standard. Then we know that in one market for one year, we know that there's going to be some sort of change, et cetera, so we might adapt it a few percentage points up or down. But in principle, everyone needs to deliver the same.
Fair enough. It was previously asked, but it probably goes to all of you as well, not only Magnus. Several of your competitors are talking a lot about AI, machine learning, and LLMs improving efficiencies. How are you generally working on this, and how is your view in a near-term perspective? So till 2028, how much efficiencies do you expect to find?
As the only computer science student in the panel, we are a believer in AI. We are a user of AI, and it has accelerated, I would say, in the last year to the point where we now need to make sure that tokens are well spent. But I think we implement it in Hoist in a different way. I think many are looking at the front end, right? The consumer versus our frontline staff That there is where the big benefits are. We are actually doing it from the opposite.
We are going from the group functions to the investment team, to the back office in the countries, et cetera, where we have massive amounts of data, massive amounts of documents, et cetera, that we need to sort out, which previously sometimes when we onboarded a portfolio, we have brought in 50 students to sort through the paper that comes with a truckload for a portfolio. Binders that would fill this stage. This we do not do anymore. Right. AI tools, et cetera, are doing those things for us now, and we can employ the students for other stuff.
Makes sense. Maybe a rude question, and maybe Fabien, you can hold your ears now. But if we look at your position, you have your funding advantage. Other competitors are trying to replicate the funding advantage. Then you say that, okay, then your investment experience is another competitive advantage. What do you do internally to prevent a competitor from giving Fabien a call tonight, offering him a horrendous amount of money and offering him to bring the five smartest guys and women you have on board and leaving tomorrow? What would happen then?
You want me to answer?
No, obviously, if you are going to copy Hoist Finance, where do you look? You look at Hoist Finance. People have been doing that now for a couple of years. So far, we have lost very, very few. If you are, and now I am speaking for your people, and maybe for yourself. If you are an investment professional, you want to, every once in a while, make an investment. You want to work for the company that lands and wins the most investments. I think that is the key reason why our investment team is intact in this market, and in fact, currently is attracting people from players who are not deploying as much and who have not managed to deploy as much in the past few years. I think that is by far the biggest.
If we talk about the pile of money and so on, that is a different story. We do have incentive programs internally and so on. All our bonuses are according to banking rules, deferred four years and so on. There is some sort of stickiness in that. I think the absolute main reason is you want to win at the work you do, and I think our investment team have won a lot lately.
People in the investment team, we have had very, very little people leaving, actually. Over the past four years, maybe one or two, and that is it. Hopefully that will stay the same. As we said, we are trying to incentivize them to stay. More importantly, I think we are trying to create opportunities internally as well. There are a few that are moving into the countries or into other functions. We are thinking about their career path as well. This is very important. Investment team is not everything. The countries are a big part of those wins. It is an oversimplification to say that we have very smart guys doing the investment. That is not true. It is true, but it is not enough. That is not enough, unfortunately. If you want to replicate, you need to hire 250 people, not those 50 only.
All right. If we do not have any more questions from the audience. Yes, maybe.
Maybe just given your size now, how much you have grown, how should we think about when you are growing forward? Is that mainly going to be outsourced collections? As a direct follow-up on that, given that you have a much bigger base now, would it be worth to staff up much more in the big countries to do more in-house, given that, I suppose, has better margins?
I think with the growth going forward, as Magnus said, we will be cautious in adding any sort of fixed structures. We have a functioning outsourcing framework. I think Sarah wrote the book on that, our Greek country manager, which we are all benefiting from. I think that framework, we can use that to make sure a little bit as, I am not really sure which one of the country managers, maybe it was Andrea, mentioned that we keep the, let us say, lighter touch, more cash-generating parts of the portfolio, and then we can outsource the heavy lifting parts of the portfolio, which maybe requires a completely different infrastructure than we do have. But we will continue to be cautious about building up, let us say, fixed or semi-fixed structures in the company.
The final question, part of the pillars for growth was expanding geographically. Which countries are missing in Europe that you do not have today that would be reasonable size, and when do you look for U.S. or something beyond Europe?
In terms of countries, we like the Nordics. I think we have been public about that before. We are present in half the Nordics at the moment. So those, I guess, would be a natural next step. Then there is, let us say, maybe Ireland and so on left. So there are a few markets where we see opportunities to expand. We will be staying in Europe. We have no plans during this strategic period to enter outside of Europe.
All right. I think that sums up the Q&A session. Then I will leave the floor for Harry for some concluding remarks.
Yeah. Thank you very much. Thank you. I had some notes here, and then I need my glasses. Thank you. It has been a long day, long session. I hope you have gotten to know Hoist Finance a lot better today or now than in the beginning of the session. To leave you with some concluding remarks from this Capital Markets Day, the whole summary is basically what are we going to do 2026 to 2030 now. We have the new targets in place. They have been communicated. How are we going to deliver on them? I think we have tried to show that here today. It is continued focus on the profitable growth with this investment ambition of SEK 60 billion by the end of 2030.
We will maintain strong cost control and return focus to make sure that we reach both the EPS target and the ROE target. The scale benefits of the growing portfolio will expand this operational leverage further. We have talked a lot about the sourcing capacity, the four different asset classes, let us say, combined with the borrower types and so on. I think that it is a sourcing advantage, but it is also a risk mitigant basically, meaning that 4 times 15, we have 60 different places where we can allocate our capital. If something gets too intense or falls below our hurdles, then we have multiple more places to deploy. Of course building up the resilience and the stability in the book. Everything will move a little bit slower. A larger portfolio at the same absolute investments will grow slower. Similar on the liability side.
We will become a more predictable and stable company going forward. With that, I guess there are no further questions, Q&A sessions are locked. I just want to thank everyone for joining us here on this capital markets update or Capital Markets Day today, and thank you for your interest in Hoist Finance. Thank you very much.